The NAHB notes the the Q4 2016 Index reading of 67 was unusually high, so the lower number this quarter came as no surprise. The current 55+ HMI is still above 50, sitting at 55, meaning more builders are viewing conditions for this market as good rather than poor. The 55+ HMI has been over 50 for 12 consecutive quarters.
“Although builder sentiment is down from the previous quarter, overall confidence is still in positive territory and builders remain optimistic,” said Dennis Cunningham, chairman of NAHB’s 55+ Housing Industry Council
The NAHB produces two 55+ HMIs. One HMI covers the single-family market, the other cover the mult-family condominium market. Each Index utilizes a survey which asks if prospective buyer traffic is and anticipated six-month sales are good, fair, or poor. The Index is divided into three components: present sales, expected sales, and prospective buyer traffic. Each of these three compentnts dropped in Q1 2017.
Present sales fell 12 points to 62, expected sales fell seven points to 68, and prospective buyer traffic decreased 15 points to 34.
According to the NAHB, the decline in the Index reflects the aftermath of a post-election surge in confidence.
“We saw an unusually high 55+ single-family HMI in the 4th quarter of 2016 due to a post-election surge in optimism. As this wears off, confidence is returning to a more sustainable level,” said NAHB Chief Economist Robert Dietz. “Although builders are struggling with shortages of labor and lots, as well as higher lumber prices, market conditions on balance remain favorable, and we expect solid growth in the 55+ housing sector.”
Find the complete Index here.